Monday, November 06, 2006

Founders keepers

After aspiring for years to become an heir, I’m redirecting my career effort to finding work as a founder. Judging from today’s events, it’s a far, far more lucrative gig.

First, the trio who gave us the Outback Steakhouse chain—Chris Sullivan, Bob Basham and Tim Gannon—come forward to say they’re buying back their brainchild with help from some big-time financiers. Bain Capital, the one-time owner of Domino’s Pizza and co-owner of Burger King, is joining forces with one of the more intriguing and hyperactive private-equity firms buying into restaurant companies, Catterton Partners, to provide part of the $3.2 billion that Sullivan’s group has offered for Outback (now known as OSI Restaurant Partners). If you don’t know Catterton, you’re likely familiar with some of its holdings: Stakes in P.F. Chang’s and Jean-Georges Vongerichten’s new string of hotel restaurants, Spice Market, along with up-and-coming brands like the First Watch breakfast concept, or the Cheddars chain.

I’m surprised that a guy like Sullivan, who comes to the starchiest industry event dressed in a Mister Rodgers-like cardigan, would even know folks like the suits at Bain. And now he and his cohorts are going into partnerships with the Boston firm, which probably has a portrait of Thurston Howell III hanging in its hallway.

Of course, it’s not clear how the founding trio will participate in the buyout. They’re all major stakeholders. And they’re offering $40 per share to buy all of OSI’s stock. So they’ll pay themselves $40 for each share they hold? Something about that just doesn’t seem right. That’s presuming, of course, that they maintain their current stakes.

A deal of that scale had us buzzing at work today. But within hours, it was eclipsed by an even bigger industry deal, at least in terms of the dollars that will be spent. And—surprise, surprise—it was led by yet another founder.

The person this time was Izzy Sharp, co-founder and longtime CEO of Four Seasons Hotels. Sharp and his family already hold a controlling stake in the luxury lodging chain. To buy the rest, he really went big-league. His collaborators in the deal are none other than Bill Gates, of Microsoft fame, and His Royal Highness Prince Alwaleed Bin Talal Bin Adulaziz Alsad of Saudi Arabia, the kind of guy whose private jet is a 727, and uses a real cannon for his marker when he plays Monopoly. Which, no doubt, he does with real money.

Together, the three are bidding $3.7 billion, or $82 per share, for the hotel company, or about a third more than Wall Street had adjudged it to be worth in trading during the prior six months.

Twenty percent? Pfft. But 33 percent? These are not the sort of guys you want for your next game of Texas Hold ‘Em.

And why do men as rich as Gates and the prince want with a hotel company? I can only suspect that they hate having to use Expedia for reservations, and this way a room will always be waiting for them.

Well, gotta run here. This founders correspondence course takes more work than you’d think.

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